Investors interested in Financial Transaction Services stocks are likely familiar with Payoneer Global Inc. (PAYO) and Visa (V). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, both Payoneer Global Inc. and Visa are sporting a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
PAYO currently has a forward P/E ratio of 25.93, while V has a forward P/E of 27.27. We also note that PAYO has a PEG ratio of 0.76. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. V currently has a PEG ratio of 1.91.
Another notable valuation metric for PAYO is its P/B ratio of 3.65. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, V has a P/B of 18.24.
These metrics, and several others, help PAYO earn a Value grade of A, while V has been given a Value grade of D.
Both PAYO and V are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PAYO is the superior value option right now.
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Payoneer Global Inc. (PAYO): Free Stock Analysis Report
Visa Inc. (V): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).